When will you cease ignoring the glaringly obvious reason and responsibility for the historical repetition and increasing severity of the boom-bust cycles?

The current cycle started about 1971 and peaked in 2007-8, with plenty of warning dips interim. Gradually, the financial industry constructed an imaginary economy using what it disingenuously continues to call “money”. This economy could well be called, to paraphrase Dr. Eric Berne, “Games financiers play”. Its Monopoly® “dollars” bear imposing names like “Collateralized Deceit- oops, no, sorry Debt – Obligations.

This imaginary economy frequently drops grapples loaded with Monopoly® dollars into the real economy, to be exchanged for another few hundred million real dollars. When some of the financiers’ greed finally overcomes their caution, this contrived situation becomes visible; honest actors in the farce are confused as to which are real and which imaginary dollars and refuse to trade any of them. There is a bust.

Many of the financiers who did this, how they did it and when, are named and documented in current books. One such is “Reckless Endangerment”, a meticulously researched chronology of the well designed, beautifully executed theft of big pieces of the world’s wealth. Many of the perpetrators are still with us, inventing even more financial games with still more imposing titles. Credit Default Swaps, anyone? Derivatives? We have, preying on the real economy, the “outsized ambition, greed, and corruption” (to use the subtitle of the Endangerment book) of these financiers.

The main driver of all this is the egregious conflict of interest of bankers setting rules for bankers. Do I hear echoes of LIBOR? The Federal Reserve? Familiar names like Greenspan, Barclays, or Basel 1, 2, or 3? For how long will a responsible journal like The Economist ignore these plain facts?

No cheers,

F.

PS How long has your dumb engineer been warning you of this? Ten years? Fifteen? I’ve forgotten.